XAU/USD: gold prepares for new growth 25 January 2021, 11:50

XAU/USD: gold prepares for new growth

25 January 2021, 11:50

Scenario
Timeframe	Weekly
Recommendation	BUY STOP
Entry Point	1875.0
Take Profit	1958.0
Stop Loss	1850.0
Key Levels	1790.0, 1828.0, 1875.0, 1958.0

Alternative scenario
Recommendation	SELL STOP
Entry Point	1828.0
Take Profit	1790.0
Stop Loss	1850.0
Key Levels	1790.0, 1828.0, 1875.0, 1958.0

Current trend

Gold quotes have suspended their decline and consolidated around $1852 per ounce.

Despite significant fluctuations in the US dollar, which led to a decrease in the price of gold, global demand for it remains at a very high level. According to the UK Royal Mint, in the last two months alone, gold sales have increased by 510%, indicating an unprecedented level of demand.

The possible growth of the instrument in the near future is also indicated by the gradual return of interest in it from private traders. According to the Commodity Futures Trading Commission (CFTC), the number of pure speculative positions in the metal over the past week increased to 246.6K from 246.2K a week earlier.

Support and resistance

After a significant decline, the asset quotes are consolidating, preparing to work out a possible Inverted Head and Shoulders reversal pattern. Technical indicators are uncertain. Fast EMAs of the Alligator indicator intertwined with the signal one and the AO oscillator histogram is trading near the transition level.

Support levels: 1828.0, 1790.0.

Resistance levels: 1875.0, 1958.0.

Trading tips

After global growth or consolidation above the local resistance of 1875.0, buy positions with the target at 1958.0 will be relevant. Stop loss is 1850.0. Implementation period: 7 days or more.

After the continuation of the corrective decline or consolidation below the support level of 1828.0, sell positions with the target at 1790.0 will be relevant. Stop loss is 1850.0.